Investors worry more about China’s slowdown than about Federal Reserve Board chairman Ben Bernanke’s “taper,” according to a recent informal poll. Goldman Sachs expects the Chinese economy to grow by 7.4 percent this year. That’s way down from 10.4 percent in 2010, 9.3 percent in 2011 and 7.8 percent last year. If the investment firm is right—others put this year’s figure as low as 6 percent if the regime really means to engineer a credit crunch—this will be the first time since the 1997 Asian crisis that China does not hit the target set by its central planners, a relatively modest 7.5 percent. And it might be the year in which a slowdown in China is felt in America, aborting our fragile recovery. But only “might”: The recovery here has increasingly strong support from the housing sector and from rising consumer wealth and confidence, which is what prompted the suddenly garrulous Bernanke to discuss in detail—with dates—plans to tighten monetary policy if the recovery picks up a real head of steam. That important “if” escaped the notice of most traders, who scurried to the bond and share market exits.

President Obama was the first to threaten the economic recovery: he raised taxes. Next came the Republicans in congress: they cut spending, tightening fiscal policy too much and too soon. Now it is China’s turn: President Xi Jinping ordered a credit squeeze—the People’s Bank of China is not an independent central bank—in order to stifle conspicuous consumption by his Communist Party elite and their offspring, and rein in excessive, risky lending by China’s shadow banking sector. That sector includes everything from loan sharks to pawn brokers to leasing companies to trusts (rather like our hedge funds). Even though the PBOC decided last week against visiting on China its very own Lehman moment, and relaxed the credit strangle that had dried up interbank lending, the message is clear: “end excessively rapid expansion of credit or, as we have demonstrated, we can make you wish you had.” Right now, private-sector businesses are scrambling for cash.